Ed Morrissey obtained the summer 2009 Congressional Budget Office report on the health of the Social Security “Trust Fund”, and the news isn’t good. The same CBO that, last year under now-Obama budget director Peter Orszag, claimed that the combined OASDI trust fund would not begin to run a primary deficit (what Ed calls a cash deficit and what I’ve called an ex-interest deficit) until 2019, is now saying, at least to Congressmen, that it will run a primary deficit in 2010 and 2011, briefly run a cash surplus between 2012 and 2015, and return to what is presumably a permanent primary deficit in 2016.
I guess that is what the ranking member on the House Committee on Financial Services, Rep. Spencer Bachus (R-AL) was refering to when he told his hometown paper that Social Security would go into the red before 2012 if things didn’t improve dramatically. The 2010 primary deficit is also something predicted in the 80%-confidence curve of the stochastic model.
I do have a problem with the CBO’s numbers starting with 2012, when they claim that the OASDI primary surplus would begin its last run in the black. They assumed a 6.19% growth in revenues derived from the payroll tax in 2012, and a 5.69% growth in revenues in 2013. I decided to re-run the numbers using the still-high 4.59% growth in revenues called for in 2014 for those two years, and low-and-behold, the primary deficit never quite turns around:
On a related note, the Office of the Chief Actuary does not have the August 2009 “trust fund” performance available yet. However, the 12-month primary surplus between August 2008 (when the “trust fund” began running monthly primary deficits) and July 2009 is only $32.5 billion, with 8 of the 12 months having a primary deficit.
Revisions/extensions (10:27 am 9/22/2009) - Corrected a typo due to a misread of the chart. The CBO predicts permanent red ink for Social Security beginning in 2016, not 2017.
R&E part 2 (10:49 am 9/22/2009) - A couple of housekeeping items:
First, thanks for the link, Ed. Without you getting the numbers out of the CBO, I wouldn’t have been able to run with them.
Second the cumulative 10-year primary deficits of $152 billion (if CBO’s numbers are right)-$264 billion (if my numbers are right) will need to be added to the overall 10-year deficit of $9 billion and overall projected debt of $22 billion as they are currently unfunded liabilities.
R&E part 3 (6:02 pm 9/22/2009) - In case you missed the trackbacks on Hot Air, some more good reading can be found at both Ace of Spades HQ and Daily Pundit. Bill Quick notes that the bipartisan Party-In-Government will not let SocSecurity fail spectacularily, though I note that the numbers simply aren’t there for a 1983-style fix, and that final failure isn’t slated for another 25 or so years. The Morons are, as always, our informative and entertaining selves.
R&E part 4 (10:45 am 9/24/2009) - The conversation continues above, with some new numbers from both Tom Blumer and the Social Security Administration.